During the previous blog post, we discussed how to make a ‘back of the envelop’ calculation of potential income after retirement versus future expenses. Most of us will be shocked by the findings. We will realize that we will either have to adjust our standards or make corrective actions in the next few years in order to maintain a similar lifestyle.

I would personally prefer the latter. Hence, I will share with you some suggestions on how to increase the income (inflows) after retirement.

Here are my key suggestions:

Make sure you fulfill the conditions to get the full basic State Pension. If you live in the UK, you need a total of 30 qualifying years of National Insurance contributions or credits in order to be eligible for the full basic State Pension. In order to find out whether you have any gaps on your state pension contributions and whether you can pay voluntary contributions to fill these gaps, pls refer to the gov.uk site.

Check if you employer offers you the option to match your contributions (i.e. offers to pay more to your pension pot, if you agree to increase your contributions to the scheme too).

Capitalize on any tax-efficient additional pension contributions to

Small actions now can have a big impact later on

private pension schemes. In many countries, you can receive tax relief for your additional contributions up to a specific amount. In the UK, you can also carry forward any unused annual allowance for tax relief on pension savings from the previous 3 tax years. You can find more information at the HM& Customs Site. It might also be useful to get financial advice. These regulations are complex and change often.

Note: you cannot have access to your pension pot until later in life. You need to be aware of this when you do your financial planning. Also, remember that the pension you will receive is normally treated as earned income and you will be liable to income tax – but possibly at a much lower rate versus now.

Make investments that will provide you additional income after retirement. For example, you can invest in a buy-to-let property. If the rent you receive by then is higher than the related expenses, it will be an additional income. In case the property appreciates, you can also have the option to sell it. Like with every investment, make the necessary due-diligence before moving ahead.

Finally, remember that it is possible to continue working after retirement age. Nowadays, people live longer and want to have interesting lives and add value to the society. It doesn’t necessarily mean that you have a full time job. Part-time options or consulting can be possible. I have a friend in her early seventies who works as an elections observer for international organizations. She does 2-3 missions per year where she uses her business skills and experience for a good cause. She is a true inspiration to me. So, we can all re-invent ourselves for a second or third career path later in our life.

The bottom line: The earlier you start planning your finances regarding your retirement the better it is. Small actions now can have a big impact later on.

(If you want to get financial advice tailored to your needs, please find an authorised financial advisor in your country. This blog is to help you understand the situation you will face and encourage you to do something about it now.)

Korina Karampela is the founder of b4iapply. She passionately believes in empowering people to make informed decisions about their career and their finances. She is a senior executive in the pharmaceutical industry and has an MBA from MIT Sloan. In her limited spare time, she provides pro-bono career advice. Her b4iapply blog is recommended by The Guardian for professional development.

I am in my mid-forties and I have been working for more than 15 years at highly demanding jobs. I met many interesting people, went to places that I wouldn’t have visited otherwise and learnt a lot from the various experiences while going up the corporate ladder. However, it is difficult for me to imagine that I will continue working with this intensity for another 20 years.

When I shared my thoughts with friends and colleagues, most of them responded that even if we want to work until 65 years old, there will be very few jobs for us and these jobs will probably be at a much lower level.

Not to mention that due to the challenges that pension systems in different countries already face, the retirement age will keep increasing and the amount of money we will receive will keep decreasing. Hence, we should not assume that if we do what our parents did, then everything will be ok.

Since we will have to work much longer than previous generations, how can we can get better prepared for the future?

Good financial planning is key to success. The basic concept is very simple. While we are working, our salary (usually) covers most of our expenses (e.g. mortgages, food, clothing, vacation etc). When we will retire though, we want to ensure that our pension (state & private) plus other sources of income are sufficient to cover our expenses.

The earlier we start acting, the better it is.

It would help to do some “back of the envelope” calculations before deciding how to act.

Calculate how much money you will need to live when you will stop working at retirement. Write down the key annual expenses; especially the big ticket items e.g. mortgage payments/service charges/rent/private health care insurance/car insurance/food etc). You can also add an amount for the ‘nice to have’ items e.g. vacation, hobbies etc. This would help you to get a rough idea how much money you will need on an annual basis a) for the basics and b) for a more comfortable lifestyle.

Estimate how much money you will receive after your retirement. The key sources will be your pension (both the state and the private one). You probably have a good understanding of the state pension level in the country you live (For example, it will be around £150 per week or £600 per month in the UK). For the private pension, you can usually get an illustration from your pension provider. Otherwise, you can do the calculations yourself. A good ‘rule of thumb’ is to estimate the pension pot you will have at retirement age and then divide it by 25 years life expectancy and get a ball park of the annual private pension. (For example, if your pension pot when you become 65 years old is £350K, then you may expect £14k on annual basis.)

Will you have enough money for your retirement?

So let’s take an example:

Kate is 45 years old and her annual salary is £70K. Her current pension pot is £100K. Both Kate and her employer contribute around 10% of her annual salary to her pension pot. If we assume that she will contribute for another 20 years, her pension pot would be £240K at retirement age (10%*£70K*20 years = £140K +£100K her current pension pot = £240K (Note that we didn’t take into consideration the possible growth of the pension funds depending on Kate’s investment decisions for the sake of simplicity). If we assume a 2.5% growth for the next 20 years, then the pension pot will increase to £335K.

The £335K pension pot translates into £13.4K every year (£335K pot/25 years=£13.4K). If you also add £7.8K from the state pension (£150 per week* 52 weeks = £7.8K), then the total amount from pensions that Kate will receive after she reaches the retirement age will be £21.2K approx per year.

Note that the income that Kate is expected to have from her pensions at retirement is 1/3 of her current salary. So, her living standards will have to be adjusted accordingly.

My suggestion is for you to do a ‘back of the envelop’ calculation based on your personal circumstances. Keep these calculations simple. It is not necessary to include inflation/growth of investments & taxes. All these definitely will have an impact. However, it is very difficult to make predictions when the time horizon is 20 years or more. The whole point of this exercise is to get a feel of the big picture i.e. what is the gap between your income after retirement age versus the outgoings you expect to have at that age.

The bottom line: Even if you are surprised by the outcome of this exercise (and trust me you will!), it is better to know the gap between the pension money you will receive and that you would need to have a comfortable lifestyle after retirement so you have time to make the necessary corrective actions.

At the next blog post, we will discuss what we can do to get better prepared for the future.

(If you want to get financial advice tailored to your needs, please find an authorised financial advisor in your country. This blog is to help you understand the situation you will face and encourage you to do something about it now.)

Korina Karampela is the founder of b4iapply. She passionately believes in empowering people to make informed decisions about their career and their finances. She is a senior executive in the pharmaceutical industry and has an MBA from MIT Sloan. In her limited spare time, she provides pro-bono career advice. Her b4iapply blog is recommended by The Guardian for professional development.

It has been a long time since I last shared my thoughts with you. The reason I decided to write now is because I had an encounter that made me feel uncomfortable.

I am a huge advocate of getting feedback and I am shameless in asking for it from people I trust and respect. However, when a good friend (and mentor) offered me constructive feedback a few days ago, I didn’t feel happy about it.

“Some suggestions for you to think about” she said. I was taken aback. I did not expect it so I was not emotionally ready to have this discussion. Most importantly though, the suggestions were on a subject that I consider myself an expert. Hence, I didn’t even think that I can further improve. Was it a ‘blind spot’ I was not aware of?

Needless to say I felt uncomfortable and surprised. The good thing is that I am older and wiser now (or so I want to believe!) and I quickly managed to contain the negative feelings. I asked my friend to give me some specific examples in order to understand better her perspective. Later, we moved on to other topics.

When you get feedback irrespective whether you like what you hear or not, remember to smile:)

I reflected on this experience afterwards and the reasons why I didn’t feel at ease. In general, I am continuous trying to develop myself. In most cases, I am the one who identifies an area to work on and invite people to give me some constructive suggestions. In this case though, somebody else took the initiative to let me know of a behavior I was not aware of (my ‘blind spot’) and I was caught off guard.

Here are some of my thoughts that may be also useful to you.

Be aware of your ‘blind spots’. The problem with ‘blind spots’ is that we cannot see them. Others though can but they usually don’t tell us anything about them. Why should they bother? Most people want to avoid uncomfortable discussions. So, it helps to develop a network of trusted friends/colleagues/mentors to whom we give the permission to share their observations with us about areas we need to know even if we have asked them for feedback on the specific occasion or not.

Check for ‘blind spots’even in areas you consider yourself an expert. This is a typical missed opportunity by many. However, the key to success is by further advancing our strengths. Be open to suggestions from people you trust. Some small changes (e.g. on how you communicate your hard-earned knowledge) may have a significant positive impact in the way your are perceived and can lead to further career advancement.

Consider yourself lucky if somebody takes the time to help you identify your ‘blind spots’. (And if it is difficult at the beginning, pretend it until you become it.). Also, remember that people who are willing to give you feedback, they usually do it because they care about you. It doesn’t mean they are always right. This is up to you to decide but they take the risk to tell you things that you won’t be happy to hear initially and you wouldn’t know otherwise.

The bottom line: We all have ‘blind spots’ and we are unaware of them. If somebody helps us to discover them, we need to be happy even if initially we feel a bit hurt.

I would like to hear from you. Have you gone through similar experiences? What were your learnings? Feel free to share your thoughts with us.

Thank you for reading,

Korina

Korina Karampela is the founder of b4iapply . She passionately believes in people’s development. She is a senior executive in the pharmaceutical industry and has an MBA from MIT Sloan. In her limited spare time, she provides pro-bono advice to whomever is asking for it. Her b4iapply blog is recommended by The Guardian for professional development.

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We have all started our careers with big aspirations and then for various reasons along the way we had to settle. Things may have not progressed as fast as we would like, or we simply had to put our career on hold in return for a decent wage and security.

For some people, this is ok because their priorities have changed. Others though continue having ‘what if’ thoughts.

If you still have the urge to further progress your career, then:

It is never late to re-ignite your career!

Be clear about what you want to do. Do you aim for a bigger job in the company you work? Do you want to make a career change? Do you want to become self-employed? This step is the one that most people find most difficult to define.

Stop thinking and start doing. Don’t procrastinate for too long. If you are not 100% certain, take small steps. Get the opportunity to be involved in interesting project at work, volunteer for a relevant initiative a few hours per week , start a course that will up-skill you , meet people in the field you would like to get involved. Then reflect on the experience. Is it what your are looking for?

Be confident. Think what skills and experiences you need to go to the next level and develop a plan how to get them. Eliminate thoughts like ‘I am not good enough’. Focus on what you need to do to become good enough.

Go for small wins first. The most common mistake that people do is that they expect too much too soon, they often get disappointed and give up prematurely. Have realistic expectations and keep trying.

Let luck to play its role. There is not substitute of hard work. However, don’t underestimate the power of luck. It can manifest in many ways: you may move to a field that is growing, you may meet people who can introduce you to the right contacts, etc.

The bottom line: If you had put your career aspirations on hold and you now feel you want to re-ignite your career, go for it. It is never late.

Have you gone through this type of experience? If yes, what were your learnings?

Korina Karampela is the founder of b4iapply, author of 2 books, and speaker. She is a senior executive in the pharmaceutical industry and has an MBA from MIT Sloan. Her b4iapply blog is recommended by The Guardian for professional development.

There are a lot of books and articles around to inspire you to take the leap to the unknown if you are unhappy with the direction your career has taken. They all state that the journey will be a rough one but it is worth the effort.

What if you did your research, made the transition but a few months down the road, you realize it doesn’t work out as you planned it. What do you do? Do you give up or not?

There is no doubt that this is a very difficult decision to make. Nevertheless, you need to ensure that you don’t let your emotions influence your decision.

There are plenty of stories around where perseverance was the reason for the ultimate success. At the same time, ‘failing fast’ has been the mantra of most entrepreneurs.

Here are the two key questions that might help you decide the next steps:

– Does it make financial sense?

‘Follow your heart and money will come’ is not a good advice. When you make a career change, it is likely that you get a pay cut at the beginning while you are building your expertise and record in the new area. If you set up your own business, you probably have invested your own money. (My advice: Always have enough cash to cover at least the first 6-12 months.)

With a few months of experience under your belt, you can make realistic predictions about the financial matters.

If you believe more time is needed for the initiative to take off, then explore options to support yourself during this period. You can get a part-time job, do some consulting, or find somebody who believes in your idea and is willing to invest his/her money in order to be part of its future success (My advice: avoid getting money from family and friends because if things goes awry, you will not only lose money but also some of the people you care).

– Does the career change make you happier?

If it isn’t what you expected and doesn’t make you feel fulfilled, then it is no-brainer. Accept you have made a wrong choice and start exploring other options.

You definitely learnt a lot during the last few months that will help you design your next move. Many times our career goals evolve based on our experiences. Unless we act, we cannot really find out whether we like something or not.

If you are convinced that you won’t be able to earn a living out of it but you still loving doing it, then you may want to consider how this initiative can be evolved you so you can still work on it during your free time (evenings, weekends and vacations) while you find another job that will help you pay the bills. Sometimes ‘failing fast’ is the best business option although it is difficult to accept it emotionally.

The Bottom Line: There is no wrong or right answer and definitely there is no risk-free option.You are the one who needs to decide whether the ‘Never Give Up’ or the ‘Fail Fast’ philosophy applies in your specific case.

Korina Karampela is the founder of b4iapply, author of 2 books, coach and speaker. She has been working as senior pharmaceutical executive for 14 years and has an MBA from MIT Sloan. Her blog b4iapply is recommended by The Guardian for professional development.

We live in a fast changing environment. Life-long learning is necessary.

There are many ways you can develop yourself. You can read books, watch educational programs, attend workshops, or learn on the job. Take every opportunity you can to master the skill you have identified.

Become Comfortable Out of Your Comfort Zone

If you feel a bit apprehensive at the beginning, you are on the right track. It means that you are doing things outside your comfort zone. Keep doing them. Welcome the feeling of “the knot in your stomach” when you try things for the first time. Expect to make mistakes when you are learning and learn from these mistakes. If you don’t make any, it means that you don’t try hard enough.

The bottom line: Identify the area you want to develop and go for it. Learn to be comfortable out of you comfort zone.

Korina Karampela is the founder of b4iapply, author of 2 books, coach and speaker. She has been working as senior pharmaceutical executive for 14 years and has an MBA from MIT Sloan. Her blog b4iapply is recommended by The Guardian for professional development.